4 / 5 Stars
5 5 1 5 2
Zacks Investment Research
1 (Strong Buy)
Standard & Poor's
5 / 5 Stars
#3 in Equity Energy
U.S. News evaluated 48 Equity Energy Funds. Our list highlights the top-rated funds for long-term investors based on the ratings of leading fund industry researchers.
The fund has returned 14.52 percent over the past year, 2.03 percent over the past three years, 16.18 percent over the past five years, and 12.60 percent over the past decade.
|Trailing Returns||Updated 02.28.2014|
|Year to date||0.6%|
|3 Years (Annualized)||2.0%|
|5 Years (Annualized)||16.2%|
|10 Years (Annualized)||12.6%|
The Vanguard Energy fund is run by experienced management that offers its investors a wide selection of the largest energy names on the market.
As of March 05, 2014, the fund has assets totaling $12.31 billion. Its portfolio consists of common stocks of energy-related companies in the U.S. and abroad.
Energy funds plummeted after the commodity bubble burst in 2008, losing 51 percent on average. Vanguard Energy was no exception, falling 42 percent in 2008. Energy-focused funds rebounded during the market's rally, only to take a sharp hit again this year. That decline includes this fund's holdings in Gulf of Mexico oil spill culprit BP - a position the fund held to its detriment in the second quarter. Still, management remains diversified among all the differenct subsectors of the energy industry. When small subsectors rally, the fund may lag, but over the long term the fund's volatility is among the lowest in its category, according to Morningstar. The fund has returned 14.52 percent over the past year and 2.03 percent over the past three years.
The fund boasts a low turnover rate, holding stocks for five years on average. Management's avoidance of highly speculative companies in the sector tends to prevent the fund from losing as much as its competitors in down markets. The fund has returned 16.18 percent over the past five years and 12.60 percent over the past decade.
The fund invests in companies with proven reserves and leading energy market positions. It invests in most slices of the industry but focuses on large, integrated oil companies, according to Morningstar. The fund also invests at least 80 percent of its assets in stocks of companies related to energy activities, such as production and transmission, the making of components of products for energy activities, energy research, and energy conservation or pollution control. The fund may invest up to 100 percent of its assets in foreign stocks. In late 2010, about 40 percent of the fund's assets were invested in foreign stocks.
Role in Portfolio
Morningstar calls this a specialty fund, saying, "This fund can serve as a good diversifier, but given its large stake in major oil companies, it may overlap with investors' other holdings."
The majority of the fund's assets are managed by Karl Bandtel, senior vice president and equity portfolio manager of Wellington Management, who became lead manager in 2002 and is supported by a team of analysts. James Troyer, principal of Vanguard, has managed a portion of the fund's assets since 2006 along with Vanguard's Quantitative Equity Group.
Vanguard Energy Fund has an expense ratio of 0.31 percent.
While the fund itself has below-average volatility, as an energy sector fund, it is highly susceptible to problems affecting the unstable energy industry. There is also risk that political upheaval, a financial crisis, or natural disasters would negatively affect the fund's foreign investments.